Senior Finances: Buy or Rent??

Many seniors today are faced with the dilemma of whether to purchase a home or rent one. There are several variables to consider in the process of deciding what avenue is best for you. Let’s take a look at what some of them are.

Perhaps the most important considerations are the state of your health, and your age. If you are healthy, no matter what age, you are likely more able to consider owning a home of your own in retirement, because you are more likely able to take care of routine maintenance and repairs yourself. The questions to ask concerning health are these:

If a minor repair is needed (fixing a leaky faucet, tightening drawer pulls, changing out a light switch that stops working), can I do that myself?

If I live in a four-season environment, can I manage snow removal or do I have to hire someone to do that?

If I live in a desert environment, can I maintain the desert landscape, or do I have to hire someone to do that?

Health issues often develop for retirees as they age. What made sense at 65 may not work at age 85. The older we are, the less likely we are able to manage household ownership. Many retirees in their 80s consider selling their homes and renting or moving into a retirement community or assisted living facility. The reason is that they are unable or unwilling to continue to clean house, maintain a yard, handle household repairs as they crop up, pay taxes and insurance on the dwelling… that is, do all the daily living tasks that are required with home ownership. The inability to do these things is often related to health issues, and you need to be brutally honest with yourself about whether or not you can handle all that is required of home ownership. If there is any question at all, you are probably going to be better off renting a retirement home or looking at assisted living.

Remember, when you rent, the worry about routine maintenance, yard care, taxes and insurance belongs to the owner of the property, not you. Taking those issues off your plate is often a relief for many senior citizens. If you or your spouse/partner are in poor health, stress is reduced by renting and security is increased because someone else is doing the maintenance and repair of the property.

So let’s go on to financial issues. We all know that if we own our home, we have the equity that we build with the purchase of the property. The biggie here is whether or not you can afford to pay for maintenance and repairs if you are unable to do so yourself. Many seniors live on fixed incomes and are unable to pay for a mortgage, repairs and ongoing maintenance, taxes, insurance; the finances just don’t allow for all that is required in owning your own home. However, if you can afford all that is required to meet those financial obligations, then the only issue is whether or not you want to be faced with those obligations or not.

When you rent, you can choose a home/apartment/condo that meets your budget and fits your lifestyle. If a mortgage is out of the question, renting still allows for your lifestyle needs to be met and your budget to be considered. You are bound by your mortgage if your choice is to buy; being in the unfortunate situation of having to sell a home is not pleasant.

So when you are trying to decide whether or not to buy or rent a home in retirement, consider your age, your health and your financial condition. We also recommend getting the advice and opinions of your trusted financial advisor and family members whom you consider having good opinions about important matters. Culling all the data you can means you will be in a better position to make a life-impacting decision about whether to buy or rent your retirement home.

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